200 Test 2.pdf

# How much corn will the rats eat c2 75c1 c1 c275 1200

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. How much corn will the rats eat? c2 = .75c1, c1 + c2/.75 = 1200 + 600/.75 = 2000, c1 = 1000, s = 200, rats eat .25x200 = 50 4. [1 Mark] A friend who is enrolled in Psychology 100, has realized he has no chance of passing next week’s multiple choice. By guessing on each of the questions his expected grade is 25 percent. He tells you that he even considered breaking into the duplicating department and stealing a copy of the test! The break-in might mean he gets 100 percent, but it might also mean getting a 0 if he gets caught. Your friend says that the risks don’t justify the rewards; he’s going for the 25 percent. Assume that he is an expected utility maximizer with preferences for grades given by u(w) = w 1/2 . Given that he decided against the theft, what is the minimal probability that he attaches to getting caught? G (0, 100: p, 1 – p) has EU = (1 – p)10. If guess u (25) = 5. (1 – p)10 = 5 means p = ½ 5. [1 Mark] Joe’s wealth is \$100. He is risk averse with u(w) = w 1/2 . Joe needs to pick up a shirt at a downtown store. If he parks illegally there is a 10% chance his will be fined \$75. Mary offers to sit in Joe’s car so he will not get ticketed.

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• Summer '15
• RobertBarber

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